ALAMEDA COUNTY, Calif. - Last week, a group of California gasoline retailers have filed suit in Alameda County Superior Court against Safeway Inc. over the grocer??s low fuel prices, Reuters Legal reports.

The lawsuit alleges that the supermarket chain provides significant savings on fuel purchases in order to boost grocery sales, which violates the state??s unfair competition regulations. California has a law that prohibits retailers from offering merchandise under cost to promote sales of other products and undermine competition.

The independent station owners claim that Safeway offers discounts on gasoline as high as 13 cents per gallon to customers with receipts from its grocery stores. That translates into offering the fuel for under the wholesale price of gasoline.

"A large corporate entity like Safeway is in a position to lose money on the sale of gas to make money on the sale of groceries," said James Dombroski, the plaintiffs?? attorney. "That's anticompetitive and forces the little guy out of business."

Dombroski said one of the plaintiffs has closed his business because he was unable to compete with a local Safeway fueling station. This suit asks for an injunction forbidding Safeway from offering discounts on fuel that would drive the price below cost. The lawsuit also seeks at least $100,000 in damages.